Silver Extends Selloff as Volatility Overwhelms Speculative Rally

Silver resumed its steep decline on Thursday, erasing a short-lived recovery and underscoring the extreme volatility that has gripped the market in recent weeks. Spot prices dropped more than 9% to around $80 an ounce, after briefly falling as much as 16% during the session. Futures in New York also slid sharply, trading near $79.6 an ounce.

The renewed selloff follows an extraordinary run-up earlier this year, when silver prices surged to record levels before suffering an abrupt crash of nearly 30% last Friday. Despite the recent correction, silver remains dramatically higher on the year, having gained about 146% in 2025, according to LSEG data.

Market participants say the violent price swings are being driven less by changes in physical supply and demand and more by speculative activity. Analysts point to leveraged positioning, options-related trading and momentum-driven flows as the primary forces behind the rapid ascent and equally swift reversal.

Sunil Garg, managing director at Lighthouse Canton, said a large buildup of speculative positions has yet to be fully unwound. While he maintains that silver’s long-term fundamentals remain intact — supported by demand from sectors such as solar energy, electronics and industrial catalysts — he cautioned that prices may remain unstable until speculative excesses are “wiped out.”

Regulatory and exchange actions have added to the pressure. Metals exchanges have raised margin requirements in response to the sharp price moves, a step that tends to force leveraged traders to reduce exposure. The CME Group increased margins after last week’s plunge, a move analysts say is likely to dampen speculative appetite further.

In a note on Wednesday, Goldman Sachs said the selloff accelerated as dealer hedging behavior shifted. As prices turned lower, hedging activity moved from buying into rising markets to selling into falling ones, triggering stop-loss orders and amplifying losses across the system. The bank also noted that silver’s decline has been steeper than gold’s, in part due to thinner liquidity in the London market, which intensified price swings.

Goldman added that the timing of the most dramatic moves suggests Western investors were the primary drivers of both the buildup and the unwind, as many of the sharpest fluctuations occurred while Chinese futures markets were closed.

The turbulence has drawn comparisons to so-called meme trades, where prices detach from fundamentals and are propelled by online enthusiasm and momentum. Some market watchers likened silver’s recent behavior to episodes such as the 2021 surge in GameStop, when retail-driven speculation pushed valuations far beyond traditional benchmarks.

Steve Sosnick, chief strategist at Interactive Brokers, said the precious metals rally captured widespread public attention and fueled momentum trading that surpassed even the exaggerated moves seen in other speculative assets.

Gold prices also edged lower amid the broader pullback in precious metals, slipping just under 1% to around $4,919 an ounce in spot trading, with futures near $4,938. Analysts say gold’s comparatively smaller decline highlights how silver’s thinner liquidity and heavier speculative positioning have made it especially vulnerable to abrupt reversals.